The University of Wisconsin Law School's Consumer Law Litigation Clinic has achieved a significant victory in a case that challenges a mandatory arbitration clause in a consumer contract. On October 31, 2005, Dane County Circuit Court Judge Robert DeChambeau found the mandatory arbitration clause in a national credit card's standard form contract unconscionable.

In this case, the Clinic sued a sub-prime credit card lender for making abusive debt collection calls to a number of Wisconsin consumers.  The company responded by filing a motion to compel arbitration pursuant to its arbitration clause. 

“Increasingly more businesses are using arbitration as a way to avoid court and all the protections court proceedings offer,” said UW law professor Steve Meili, director of the clinic.

The clause in question stated that Delaware law, not Wisconsin law,
would apply in arbitration, thus effectively stripping Wisconsin residents of the protections afforded to them under the Wisconsin Consumer Act. 

UW law students working in the Clinic -- Bonnie Cosgrove, Michael Carr
and Susan Kurien -- argued that the clause was unconscionable, and Judge
DeChambeau, in an 18-page decision, agreed. 

Clinical instructor Sarah Mervine, who co-supervised the case with Meili, commented, “This case presented the Clinic and its law students with one of the most challenging issues in consumer protection today:  pre-dispute mandatory arbitration clauses.”

Submitted by on November 10, 2005

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